BABABHAI SADARBHAI SHAIKH,AHMEDNAGAR vs. ITO WARD 1, AHMEDNAGAR, AHMEDNAGAR

Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: 1. The assessment order passed by the Learned Assessing Officer (Ld. AO) under Section 147 read with Section 144 and Section 144B of the Act and subsequently confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)], is bad in law due to the following reasons: a) The reassessment proceedings were initiated solely based on the assessment proceedings carried out in the case of M/s Sri Renuka Mata Multi-State Urban Co-operative Credit Society Limited, without independent application of mind. b) Non-issuance of notice under Section 143(2) of the Act renders the proceedings invalid, violating mandatory statutory requirements. c) Non-compliance with the procedural mandates of Section 144B of the Act, which governs the faceless assessment process. d) The reopening of the assessment was based on presumption and surmises, reflecting borrowed satisfaction by the Ld. AO. e) Mere cash deposits in the bank account cannot per se justify the invocation of jurisdiction under Section 147 of the Act.

The assessee has also raised an additional ground which reads as under: “The assessment order passed by the Ld.AO is bad in law and void ab initio as once reassessment proceedings are initiated on the basis of incriminating material found in the search of 3rd party then the provisions of section 153C of the Act are applicable which override the applicability of sections 147 and 148 of the Act.”

The Learned Counsel for the assessee referring to the above additional ground submitted that the additional ground raised is purely legal in nature which goes to the root of the matter and all the necessary facts are already available on record. Referring to the decision of Hon’ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (1991) 187 ITR 688 (SC) submitted that the additional ground raised by the assessee should be admitted.

After hearing both the sides and considering the fact that the additional ground raised by the assessee is purely legal in nature and all the material facts are already available on record and no new facts are required to be investigated, therefore, in view of the decision of Hon’ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT (supra) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (supra), the additional ground raised by the assessee is admitted for adjudication.

The Ld. Counsel for the assessee at the outset submitted that the provisions of section 144B of the Act have not been properly followed.

The Ld. Counsel for the assessee referring to the decision of the Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad reported in (2023) 156 taxmann.com 19 (Patna) submitted that where notice was issued by the Assessing Officer under section 148 requiring the assessee to file a return within thirty days but return was filed after eight and a half months, since return was filed by the assessee in response to said notice though delayed, there should have been a notice issued under Section 143(2) as requirement to issue notice could not be dispensed with. He submitted that in the instant case the assessee has filed the return of income in response to notice u/s 148 though belatedly. Therefore, in light of the decision of the Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad (supra) in absence of any notice issued u/s 143(2), the re-assessment proceedings are liable to be quashed. For the above proposition, he also relied on the following decisions: i) ACIT vs. Hotel Blue Moon (2010) 188 Taxman 113 (SC) ii) Chand Bihari Agrawal vs. CIT (2023) 154 taxmann.com 245 (Patna)

Referring to the following decisions, he submitted that since the Assessing Officer has only given two days time to the assessee to comply to the statutory notices, therefore, the assessment order has to be set aside due to insufficient time for submitting the details:

He submitted that since the approval has been given by the superior authority merely in a mechanical manner, therefore, such approval being not in accordance with law, the re-assessment proceedings are liable to be quashed. For the above proposition, he relied on the following decisions:

Referring to the following decisions, the Ld. Counsel for the assessee submitted that mere cash deposits in the bank account does not amount to undisclosed income of the assessee and reopening of assessment merely based on cash deposits is bad in law:

Referring to the following decisions, he submitted that the proper course of action for reassessment in the instant case was u/s 153C of the Act and not under section 147 of the Act when information is received as a result of third party search:

He submitted that the assessment order in the instant case was passed u/s 144 of the Act and the Ld. CIT(A) / NFAC has not decided all the grounds raised before him. He accordingly submitted that the appeal filed by the assessee be allowed. In his alternate contention, he submitted that the matter may be restored to the file of the Assessing Officer for fresh adjudication.

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. A perusal of the details filed by the assessee in the paper book shows that the assessee has filed return of income on 14.03.2022 declaring total income of Rs.5,75,910/-, the details of which are as under:

We find the Assessing Officer in the instant case issued notice u/s 148 of the Act for assessment year 2015-16 on 31.03.2021 and the assessee vide letter dated 14.03.2022 has responded to the said notice, the details of which are as under:

Under these circumstances, we find merit in the arguments of the Ld. Counsel for the assessee that the finding given by the Ld. CIT(A) / NFAC that the assessee has not filed any written response to notice u/s 148 is incorrect.

We find the Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad (supra) has held that where notice was issued by the Assessing Officer under section 148 requiring the assessee to file a return within thirty days but return was filed after eight and a half months, since return was filed by the assessee in response to said notice though delayed, there should have been a notice issued under Section 143(2) as requirement to issue notice could not be dispensed with. The relevant observations of Hon’ble High Court read as under: “1. The appeal is filed against the order of the Tribunal setting aside an order under section 143(3)/147 of the Income-tax Act, 1961.

The Tribunal found, relying on the decision in Hotel Blue Moon (supra) that the proceedings are liable to be struck down. It was held that the return was filed by the assessee in response to the notice under section 148 though delayed and in such circumstance, there should have been a notice issued under section 143(2) as has been held in Hotel Blue Moon (supra).

The only question of law arising in the facts and circumstances of the case is whether notice should have been issued under section 143(2) of the Income-tax Act? 5. Admittedly, the notice was issued by the Assessing Officer under section 148 of the Act on 14-7-2008 requiring the assessee to file a return within thirty days. A return was filed much later on 31-3-2009, after eight and a half months.

The Miscellaneous Appeal stand dismissed.”

In view of the above and since the Ld. CIT(A) / NFAC has not adjudicated the various grounds raised by the assessee, therefore, without going into merits of the case, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to adjudicate all the grounds raised by the assessee afresh and as per fact and law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes.